Question

3. How do the three factors that influence the size of subnational governments (variations in demand, spatial externalities, and economies of scale) explain the large number of local governments in the United States?  Why might a country like Australia have fewer local government bodies?

Please type out answer if possible,sometimes the handwriting is hard to read

Answer 1

Here are th effects of the three factors indvidually:

1) Demand: Each federal state has a different demand in terms of goods and services. While the most important benefits of the decentralization of the state as seen has been the increased effective disturbution of public goods and services to satisfy citizens’ demands. The philosophy of "bringing the government closer to the people,” it is expected that subnational officials will more precisely identify the specific needs of culturally and geographically diverse groups of individuals. Hence this is what influences the governments. It has been observed that more local governments cause service delivery to be more efficient on the demand side.

2) Spatial Externalities: This paticlar factor breaks the idea of "Homogeneous living". It is necessary to know that subnationals help the goverment to over come the problem of diversity and make it advantageous for the overall place. Different local preferences regarding public goods may lead to decentralized policy provision. Spatial externalities result in difference in tastes for public services can be especially expected when ethnic-cultural-language-regional identities differ. Individuals with different ethnocultural traditions may desire heterogenous mixes of public goods, such as education, welfare, and economic policy.

3) Economies of scale: It is not necessary the the state of Newyork and the state of California have the same development pace. The economies of scale according to the parameters and resources might vary for both of them. This causes the role to be more important for the economies to work in a distinct way and also be more cooperative.

When compared to US,the area and the ethnicity of Australia is far lesser complexed. The demand is very homogeneous and only those part which need extra care and attention might require a subnational government.